Gold & Silver PAC March 2017 e-Newsletter: Tax Edition

It’s tax time. Some expert tips to make sure you are in compliance with the law.

Internet Sales Tax

Although congress has not had any discussions about interstate sales taxes for cross-state purchases, the National Governors Association (NGA) did have some discussions about the issue during their Winter 2017 meeting in Washington, D.C. Compared with previous years, the governors did not make this a centerpiece of their economic agenda and it was not reported as a talking point when the governors met with the president.

Virginia Passes Numismatic Sales Tax Exemption

The Commonwealth of Virginia expanded their sales-and-use tax exemption to include legal tender coins. Beginning January 1, 2018, all numismatic sales made in and to Virginia residents will not incur sales taxes. Governor Terry McAuliffe (D) signed the measure into law on February 22, 2017. The new law includes a sunset clause that will end the exemption on June 30, 2022. In order for the bill to be extended, it will be necessary to show that the sales tax exemption was a contributing factor to growing the business for dealers and coin shows. Virginia passed a sales tax exemption for bullion sales during the 2015 legislative session.

Arizona House Passes Bullion Coin Sales Tax Exemption

The Arizona House voted on February 13, 2017 to exempt the buying and selling of United States minted bullion coins from sales and capital gains taxes. As the law is written, it would only allow for legal tender coins containing precious metals to be exempt. It appears to not include the buying and selling of bullion or foreign coins since they would not be “authorized by the United States Constitution or congress for the payment of debts, public charges, taxes and dues.” The engrossed bill was transmitted to Arizona Senate and is awaiting action.

Other State Sales Tax Exemptions (With a Twist)

While scanning the news, there were three stories from the legislatures of Tennessee, Alabama and Utah that would extend the exemption of gross proceeds from the sale of gold, silver, and platinum bullion, and coins from sales and use tax in the state. These bills would go further and declare that if these coins were used for purchases that those purchases would be exempt from sales and use taxation.

Although some of the details differed from state to state, there was a surprisingly similar argument used and reported during the discussion of these bills. The reporting went as follows:

“Imagine if you asked a grocery clerk to break a $5 bill and he charged you a 35 cent tax. Silly, right? After all, you were only exchanging one form of money for another. But that’s essentially what [STATE]’s sales tax on gold and silver does. By removing the sales tax on the exchange of gold and silver, [STATE] would treat specie as money instead of a commodity. This represents a small step toward reestablishing gold and silver as legal tender and breaking down the Fed’s monopoly on money.”

After further investigation, it appears that this is part of the agenda of the American Legislative Exchange Council (ALEC). ALEC claims to be “nonpartisan, voluntary membership organization of state legislators dedicated to the principles of limited government, free markets and federalism.” However, it has been reported to be a corporate-funded entity that allegedly uses ALEC’s not-for-profit status to bypass state and federal lobby laws. Media exposés into ALEC has led to bi-partisan criticism but has yet to prompt criminal investigations. The script used to generate the above story was found on ALEC’s website but was removed after I inquired about its use in three different states.

Bills introduced in these states have yet to be acted upon.

Summary of Numismatic-Related Legislation

Although the first two bills do not have numismatic content, given the stature of Augustus Saint-Gaudens in the numismatic community, I am including them in the numismatic legislation watch.

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If you have any questions or comments, please feel free to contact me at info@goldandsilverpac.org. “Letters to the Editor” are appreciated and may appear in a future newsletter.